Exhibit
4.20


 


SUBSCRIPTION
AGREEMENT


 


TO:         ADB SYSTEMS INTERNATIONAL LTD. (the
“Company”)


 


Dear Sirs:


 


The undersigned (the “Subscriber”) understands that
the Company is proposing to issue one Series F 7% secured convertible note (the
“Series F
Note”) in the principal amount of $500,000.  The Series F Note has a maturity date of May
19, 2007 (the “Maturity Date”).  The
form of the Series F Note (the “Note Certificate”) is set forth in Exhibit A attached
hereto.


 


The Subscriber wishes to subscribe for the Series F
Note in the principal amount of Cdn$500,000.00 (the “Loan Amount”) in accordance
with and subject to the terms of this subscription agreement (the “Note”).


 


The outstanding principal amount of the Note can be
converted at the Subscriber’s option into units (each a “Unit”) at a conversion price
(the “Conversion
Price”) of $0.31 per Unit prior to receipt of payment in full both
before and after default.  In addition,
if, after the date that is four (4) months plus a day from the Closing Date (as
hereinafter defined), the trading price of the Company’s common shares on the
Toronto Stock Exchange (the “TSX”) closes above $0.70 for at least five
consecutive trading days, the outstanding principal amount of the Note will
automatically convert into Units at the Conversion Price on the next following
business day (the “Automatic Conversion Date”).  Each Unit consists of one common share in
the capital of the Company (a “Company Share”) and one half of one common
share purchase warrant (the “Warrant”), with each whole Warrant
entitling the holder to purchase one common share of the Company at $0.50 per
share exercisable until May 19, 2007. 
The form of the  Warrant (the “Warrant  Certificate”) is annexed
hereto as Exhibit
B.


 


The Company Shares and the common shares issuable upon
the exercise of the Warrants (the “Warrant Shares”) are collectively referred
to in this Agreement as the “Shares”. 
The Shares and the Warrants are collectively referred to in this
Agreement as the “Underlying  Securities”.  The Note and the Underlying Securities are
collectively referred to in this Agreement as the “Securities”.


 


The following terms and conditions shall apply to this
subscription.


 


1.             Subscription
for Notes


 


(a)           The
Subscriber hereby subscribers for the Note in accordance and subject to the
terms of this subscription agreement.


 


(b)           The
closing of the issue of the Note (the “Closing”) shall take place at 2:00 p.m.
(Toronto time) (the “Time of Closing”) at the offices of Folger,
Rubinoff LLP, Toronto, Ontario, on May 19, 2004, or at such other time and
place as may be agreed upon by the parties, provided that on such date the
conditions set forth in section 2  below shall have been satisfied or waived
(such closing day or such other time being hereinafter referred to as the “Closing Date”).


 

















 


(c)           The
Note shall be issued on the Closing Date as fully registered and shall be fully
transferable subject to compliance with applicable Securities Laws (as
hereinafter defined).


 


(d)           At the
Time of Closing on the Closing Date, the Company shall deliver to or to the
order of the Subscriber the definitive Note Certificate representing the Note
subscribed for hereunder, the documentation contemplated herein and such
further documentation as counsel for the Subscriber may reasonably require
against payment of the Loan Amount by certified cheque or wire transfer payable
to or to the order of the Company.


 


2.             Conditions
of Closing


 


(a)           The
Company’s obligation to issue the Note to the Subscriber is subject to the
conditions that:


 


(i)            such issuance be
conditionally accepted by the TSX;


 


(ii)           the issuance of the Note
and Underlying Securities are exempt from the prospectus filing requirements
under applicable securities statutes, regulations, rules, policy statements and
interpretation notes and by the applicable rules and policies of the TSX
(collectively, “Securities Laws”); and


 


(iii)          the representations and
warranties of the Subscriber are true and correct as at the Closing Date.


 


(b)           The
Subscriber’s obligation to subscribe for the Note is subject to the following
conditions:


 


(i)            the issue of the Note
having been approved by the board of directors of the Company;


 


(ii)           the issue of the Note
having been conditionally approved by the TSX;


 


(iii)          the Company shall have
provided evidence satisfactory to the Subscriber that the Company has obtained
commitment to raise $500,000 in additional to the Loan Amount;


 


(iv)          the Company shall have maintained on
Closing from Export Development Canada (“EDC”) and St. Paul Guarantee Insurance
Company (“St.
Paul Guarantee”), an account receivables insurance policy (the “Receivable
Insurance Policy”) insuring 90% of value of the Company’s world-wide
account receivables (the “Receivables”);


 


(v)           the Company shall have irrevocably
directed EDC and St. Paul Guarantee to pay the proceeds from the Receivable
Insurance Policy to the holder(s) of the Series F Note shown on the Certified
Holder’s List described in section 6(i)(i), in accordance with the Payment
Instruction described in section 6(i)(ii), upon any claim made under the
Receivable Insurance Policy;


 


2

















 


(vi)          the security interest granted by the
Company in favour of each of persons shown in Schedule 3 shall have been
discharged or postponed and subordinated to the security interest to be granted
by the Company in favour of the Subscriber;


 


(vii)         Jeff Lymburner (“Lymburner”) shall have
provided a limited recourse guarantee (the “Guarantee”) for the Company’s
obligations under the Note, secured by a pledge of 800,000 shares in the
Company beneficially owned by Lymburner (the “Pledged Shares”) in
accordance with a share pledge agreement by Lymburner in favour of the
Subscriber (the “Share Pledge Agreement”);


 


(viii)        all covenants of the Company hereunder
that are required to be performed on or prior to the Closing Date shall have
been performed;


 


(ix)           the Subscriber shall have been
satisfied with the results of its due diligence review on the affairs of the
Company; and


 


(x)            the representations and
warranties of the Company shall be true and correct as at the Closing Date.


 


(c)           If any
of the conditions set forth in (a) or (b) above is not satisfied or waived
prior to Closing, this subscription agreement shall terminate and the parties
shall have no further obligations hereunder.


 


3.             Representations,
Warranties and Covenants of Subscriber and Resale Restrictions


 


(a)           The
Subscriber hereby represents and warrants to the Company (which representations
and warranties shall survive the Closing) that:


 


(i)            the Subscriber is
acquiring the Note as principal for its own account, and not for the benefit of
any other person;


 


(ii)           the Subscriber is a
resident of Ontario, and is an “accredited investor” as such term is defined in
Ontario Securities Commission Rule 45-501 “Exempt Distributions” (“Rule 45-501”);


 


(iii)          the Subscriber has an office or place of business set forth in the TSX
Private Placement Questionnaire and Undertaking attached hereto as Schedule 2;


 


(iv)          this agreement has been duly
authorized, executed and delivered by the Subscriber and constitutes the valid
and binding agreement of the Subscriber, enforceable in accordance with its
terms, except that:


 


(A)          enforcement
thereof may be limited by bankruptcy, insolvency and other laws affecting the
enforcement of creditors’ rights generally;


 


(B)           specific
performance, injunction and other equitable remedies may only be granted in the
discretion of a court of competent jurisdiction; and


 


3

















 


(C)           rights
to contribution and indemnity thereunder may be limited under public policy or
otherwise under applicable law.


 


(b)           The
Subscriber acknowledges that the Note has not been and will not be registered
under the United States Securities Act of 1933, as amended (the “1933 Act”),
and may not be offered, sold, resold or delivered within the United States of
America, its territories or possessions, other than pursuant to an effective
registration statement or an applicable exemption under the 1933 Act.


 


(c)           The Subscriber covenants and
agrees with the Company that:


 


(i)            it will execute and deliver all documentation and provide all
information required by the Securities Laws, if required, to permit the
purchase of the Note on the terms set forth herein, including,


 


(A)          an accredited investor certificate in the form attached hereto as Schedule 1,
and


 


(B)           a TSX Private Placement Questionnaire and Undertaking in the form
attached hereto as Schedule 2; and


 


(ii)           it will comply with the Securities Laws concerning any resale of the
Securities, and in particular, the Subscriber understands and acknowledges that the Securities will be
subject to a four month resale restriction under applicable Securities Laws.


 


(d)           Legend.  The Subscriber, if resident
in Canada, acknowledges that


 


(i)            the Note Certificate, and


 


(ii)           certificates representing


 


(A)          the
Company Shares and the Warrants issued upon the conversion of the Note prior to
September 20, 2004, and


 


(B)           the
Warrant Shares purchased upon exercise of the Warrants prior to September 20,
2004,


 


will contain the following legend required pursuant to
Multilateral Instrument 45-102 (Resale of Securities) of the Canadian
Securities Administrators adopted as a Rule by the OSC (“MI 45-102”), and the
Subscriber agrees to comply with the terms of such legend:


 


“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE
HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE SEPTEMBER 20, 2004.”


 


(e)           The Subscriber acknowledges that the Company will be required to provide
applicable securities regulatory authorities with certain information required
by the Securities Laws and agrees to provide the Company with any such required
information.


 


4

















 


4.             Representations
and Warranties of the Company  


 


The Company hereby represents and warrants to the
Subscriber (which representations and warranties shall survive closing) that:


 


(i)            the Company is now and has
been a reporting issuer under the Securities Act (Ontario) for the four
months immediately preceding the date hereof and is not in default thereunder;


 


(ii)           the Company has been duly
organized under the laws of the Province of Ontario and has all required
corporate power and authority to enter into and carry out the provisions of
this subscription agreement and the transactions contemplated hereby;


 


(iii)          this subscription agreement
has been duly authorized, executed and delivered by the Company and is a valid
and binding agreement enforceable in accordance with their respective terms,
except that:


 


(A)          enforcement
thereof may be limited by bankruptcy, insolvency and other laws affecting the
enforcement of creditors’ rights generally;


 


(B)           specific
performance, injunction and other equitable remedies may only be granted in the
discretion of a court of competent jurisdiction; and


 


(C)           rights
to contribution and indemnity thereunder may be limited under public policy or
otherwise under applicable law;


 


(iv)          all necessary corporate
action has been taken or will have been taken prior to the Closing Date by the
Company to validly create, issue and sell the Note subscribed for by the
Subscriber pursuant to this subscription agreement;


 


(v)           the Company Shares will be
validly authorized, issued and outstanding as fully paid and non-assessable
shares in the capital of the Company upon due conversion of the Note;


 


(vi)          the Warrants will be validly
authorized, issued in the capital of the Company upon the due conversion of the
Note;


 


(vii)         the Warrant Shares will be
validly authorized, issued and outstanding as fully paid and non-assessable
shares in the capital of the Company upon the due exercise of the Warrants;


 


(viii)        no approval, authorization,
consent or other order of, and no filing, registration or recording with, any
governmental authority is required by the Company in connection with the
execution and delivery or with the performance by the Company of this
subscription agreement except the conditional and final approval of the TSX of
which the conditional approval has been obtained;


 


5

















 


(ix)           as at May 14, 2004, there
were 61,420,621
common shares in the capital of the Company issued and
outstanding;


 


(x)            as at May 13, 2004, the
value of the Company’s world-wide accounts receivable was $872,837;


 


(xi)           as at May 13, 2004, the aggregate
principal amounts outstanding under the Series E 11% convertible notes of the
Company issued on August 19, 2003 (the “Series  E Notes”) were $600,000 and there were no
interest on the Series E Notes that were due and unpaid;
and


 


(xii)          the Company’s common shares
are listed for trading on the TSX and except as publicly disclosed, the Company
has not received any oral or written notice that its common stock will be
delisted from the TSX or that the Company’s common shares do not meet all
requirements for the continuation of such listing.


 


5.             Reliance
upon Representations, Warranties 


 


The parties agree that,
by the Company delivering the Note Certificate to the Subscriber and by the
Subscriber accepting the Note Certificate, each party will be representing and
warranting that the party’s representations and warranties contained in this
subscription agreement are true as at the Closing Date, with the same force and
effect as if they had been made by the such party at the Closing Date, and that
they will survive the purchase by the Subscriber of the Note and continue in
full force and effect for a period of two (2) years following the Closing Date
notwithstanding any subsequent disposition by the Subscriber of the Note or the
Underlying Securities.


 


6.             Covenants
of the Company.


 


The Company hereby covenants and agrees with the
Subscriber as follows:


 


(a)           to
cause the Note to be duly and validly created and issued;


 


(b)           to
cause the Shares issuable upon the conversion of the Note and upon the exercise
of the Warrants to be duly and validly authorized, created and issued as
fully-paid and non-assessable common shares in the capital of the Company;


 


(c)           to use
its commercial best efforts to ensure that the Company Shares and Warrant
Shares are listed and posted for trading on the TSX upon their issue;


 


(d)           to
promptly comply with all applicable filing and other requirements under all
applicable Securities Laws, including without limitation, the filing of Form
45-501F1 under Rule 45-501 within 10 days of the Closing Date;


 


(e)           to use
its commercial best efforts to maintain its status as a reporting issuer in the
province of Ontario and to continue to be in compliance with its obligations
under the Securities Laws of Ontario, including without limitation, the payment
of participation fees under Ontario Securities Commission Rule 13-502;


 


6

















 


(f)            to
obtain the Receivable Insurance Policy on or prior to the Closing Date, to keep
the Receivable Insurance Policy in good standing for as long as any amount
remains outstanding under the Series F Note, and not to cancel or amend the
Receivable Insurance Policy without prior written consent of the Subscriber;


 


(g)           to
create and maintain a register of holder(s) of the Series F Note (the “Holder
Register”) and shall record in the Holder Register all relevant
information on the Series F Note and holder(s) thereof, including without
limitation, name and address of each holder, outstanding principal amount(s) of
the Series F Note, numbers of Note Certificates, outstanding amount and payment
of interest on the Series F Note, conversion of any principal amount of the
Series F Note, and any assignment of the Series F Note;


 


(h)           to
deliver on or prior to the Closing Date a copy of the executed Receivable
Insurance Policy;


 


(i)            not
to make any claim under the Receivable Insurance Policy as long as any amount
remains outstanding under any of the Series F Note, unless such claims is
submitted together with:


 


(i)            a list of holder(s) of the
Series F Note as at the time of making such claim certified by an officer of
the Company (the “Certified Holders’ List”); and


 


(ii)           a payment instruction
settling out the amounts to be paid to each holder shown on the certified list
referred to in section 6(i)(i) signed by each of such holder (the “Payment
Instruction”);


 


(j)            to
deliver on or prior to the Closing Date to EDC and St. Paul Guarantee an
irrevocable direction (the “Direction”) that, as long as any amount
remains outstanding under any of the Series E Notes or the Series F Note, the
proceeds of the Receivable Insurance Policy shall be paid firstly to the
holders of the Series E Notes shown on the certified holders’ list and secondly
to the holder(s) of the Series F Note shown on the Certified Holders’ List in
accordance with the Payment Instruction to be submitted together with any claim
made under the Receivable Insurance Policy;


 


(k)           to
renew the Receivable Insurance Policy each year during the term of the Series F
Note;


 


(l)            to
cause each person listed on Schedule 3 to discharge their security
interest against the Company, or to execute a subordination and postponement
agreement to subordinate their security interest against the Company to the
security interest to be granted by the Company in favour of the subscribers of
the Series F Note; and


 


(m)          if
applicable, make withholdings required under Part 13 of the Income Tax
Act (Canada) with respect to any payments to be made to the
Subscriber under the Note and remit such withholdings to applicable governmental
authority.


 


7.             Subsequent
Financing


 


(a)           The
Company shall not, during one year following the Closing Date, complete any
debt or equity financing without the Subscriber’s prior written consent, such
consent


 


7

















 


not to be unreasonably withheld.  However, no such consent from the Subscriber
is required if:


 


(i)            in case the financing is
by way of issuance of additional debt,


 


(A)          the
terms of the financing are not more favorable to the holders of the additional
debt than the terms of the Series F Note to the Subscriber (including without
limitation, the conversion price, the number of underlying warrants issuable
upon conversion and the exercise price and term of the underlying warrants);
and


 


(B)           the
Subscriber will rank in priority over the holders of any additional debt with
respect to security interest in Company’s assets and with respect to
entitlement to the proceeds of the Receivables Insurance Policy; and


 


(C)           in
case the financing is by way of issuance of additional equity, the issue price
of any offered shares shall be at least $0.31 per share, and the exercise price
for any convertible securities (other than convertible debt) issued with the
shares such as warrants shall be at least $0.50 per share with an exercise
period no longer than three years.


 


(b)           The
Company shall provide prior written notice to the Subscriber of any financing
during the one year period following the Closing Date.


 


8.             Costs


 


(a)           All
expenses incurred by the Company (including the fees and disbursements of
counsel for the Company) relating to the issuance of the Series F Note, issue
of the Underlying Securities, listing of the Shares, printing, photocopying,
professional fees and all other costs and expenses incurred by the Company
relating to the transactions contemplated herein shall be borne by the Company.


 


(b)           The
Subscriber party shall bear its own legal and other professional expenses
incurred in connection with the offering of the Series F Note, provided that
the Company will reimburse the Subscriber for that portion of the Subscriber’s
legal fees reasonably relating to the preparation of the documents required in
the offering of the Series F Note.


 


(c)           The
Company will not incur or pay any agent’s fees, broker’s fees or other fees or
commissions in connection with the offering of the Series F Note except legal
and audit fees.


 


9.             Security
for the Note


 


The Company agrees to grant to the Subscriber a
general security interest over all assets of the


 


8

















 


Company to secure the Company’s performance of its obligations under
the Note, all in accordance with the general security agreement attached to the
form of Note (the “General Security Agreement”).


 


10.           Jurisdiction


 


This subscription agreement is governed by the laws of
the Province of Ontario and the federal laws of Canada applicable therein.  By the Subscriber executing this
subscription agreement below, the Subscriber irrevocably attorns to the
jurisdiction of the courts of Ontario.


 


11.           Facsimile
Subscriptions


 


The Company shall be entitled to rely on delivery by
facsimile of an executed copy of this subscription agreement and acceptance by
the Company of that delivery shall be legally effective to create a valid and
binding agreement between the Subscriber and the Company in accordance with the
terms of this subscription agreement.


 


12.           Confidentiality.  


 


Each of the Subscriber and the Company shall maintain
in confidence the matters referred to in this subscription agreement and shall
not make any public disclosure, except to the extent required by law, of the
terms of this agreement without the consent of the other, such consent not to
be unreasonably withheld.  The wording
of any public disclosure which is made must be approved by each of the parties.


 


13.           Assignment


 


This subscription agreement is not transferable or
assignable.


 


14.           Time
of the Essence


 


Time shall be of the essence hereof.


 


15.           Currency


 


All references herein to monetary amounts are
references to lawful money of Canada.


 


16.           Headings


 


The headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation hereof.


 


17.           Entire
Agreement


 


This subscription agreement (including the annexed
schedules hereto) constitutes the only agreement between the parties with
respect to the subject matter hereof and shall supersede any and all prior
negotiations and understandings and there are no representations, covenants or
other agreements relating to the subject matter hereof except as stated or
referred to herein or therein.  This
subscription agreement may only be amended or modified in any respect by
written instrument executed by each of the parties hereto.


 


9

















 


Please acknowledge your acceptance of the foregoing
subscription agreement by signing and returning a copy to the undersigned
whereupon it shall become a binding agreement between us.


 


DATED this          day of May, 2004.


 


	
   

  	
  STONESTREET LIMITED PARTNERSHIP, by its

  general partner, Stonestreet Corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Elizabeth Leonard

  
	
   

  	
  Chief Operating Officer

  
	
   

  	
   

  
	
   

  	
  320 Bay Street,
  Suite 1300

  
	
   

  	
  Toronto, Ontario

  
	
   

  	
  M5H 4A6

  
	
   

  	
   

  
	
   

  	
  Phone:
  416-867-6059

  
	
   

  	
  Fax:
  416-956-8989

  
	
   

  	
   

  
	
  ACCEPTED
  as of this          day of
  May, 2004.

  	
   

  
	
   

  	
   

  
	
  ADB
  SYSTEMS INTERNATIONAL LTD.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
					



 


10

















 


SCHEDULE 1


 


ACCREDITED INVESTOR CERTIFICATE – ONTARIO SUBSCRIBERS ONLY


 


TO:                         ADB SYSTEMS INTERNATIONAL LTD. (THE
“COMPANY”)


 


RE:                         SUBSCRIPTION FOR SERIES E CONVERTIBLE
NOTES OF THE COMPANY


 


The undersigned Subscriber/officer of the Subscriber (or in the case of
a trust, the trustee or an officer of the trustee of the trust) hereby
certifies that:


 


1.             he/she
has read the subscription agreement and understands that the offering of
convertible secured note to the Subscriber, is being made on a registration and
prospectus exempt basis;


 


2.             the
Subscriber is an “accredited investor” as that term is defined in Ontario
Securities Commission Rule 45-501 “Exempt Distributions” by virtue of the
Subscriber being:


 


[please check one]


 


	
  (i)

  	
  o

  	
  an individual who beneficially owns, or who together
  with a spouse beneficially owns, financial assets having an aggregate
  realizable value that, before taxes but net of any related liabilities
  exceeds $1,000,000

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
  o

  	
  an individual whose net income before taxes exceeded
  $200,000 in each of the two most recent years or whose net income before
  taxes combined with that of a spouse exceeded $300,000 in each of those years
  and who, in either case, has a reasonable expectation of exceeding the same
  net income level in the current year

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
  o

  	
  a person or company registered under the Securities
  Act (Ontario) or securities legislation in another jurisdiction as
  an adviser or dealer, other than a limited market dealer

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
  o

  	
  an individual who has been granted registration
  under the Securities
  Act (Ontario) or securities legislation in another jurisdiction as
  a representative of a company which is registered as a dealer or adviser,
  whether or not that individual’s registration is still in effect

  
	
   

  	
   

  	
   

  
	
  (v)

  	
  o

  	
  a company, limited partnership, limited liability
  partnership, trust or estate, other than a mutual fund or non-redeemable
  investment fund, that had net assets of at least $5,000,000 as reflected in
  its most recently prepared financial statements

  
	
   

  	
   

  	
   

  
	
  (vi)

  	
  o

  	
  a person in respect of which all of the owners of
  interests, direct or indirect, legal or beneficial, are persons that are
  accredited investors.

  
	
   

  	
   

  	
   

  
	
  (vii)

  	
  o

  	
  other                                                     [please
  insert exemption being relied upon, as referred to in Appendix 1 to this
  certificate]

  



 


3.             he/she:
(a) if the Subscriber, is making the above statement based on personal
knowledge of his/her financial situation and has reviewed personal financial
documentation with an accountant,


 


1-1

















 


financial advisor or other financial professional to determine the
above statement is true; or (b) if other than the Subscriber, is making the
above statement based on a review of the financial statements of the Subscriber
for the most recently completed financial year and any interim financial
statements prepared since the end of such financial year and has undertaken
such other review and due diligence necessary to determine and certify that the
Subscriber is an “accredited investor” as that term is defined in Ontario
Securities Commission Rule 45-501 “Exempt Distributions”; and


 


4.             he/she
understands that the Company is relying on this certificate as evidence of the
Subscriber’s status as an accredited investor in accordance with Ontario
Securities Commission Rule 45-501 and its companion policy.


 


DATED at Toronto this             
day of May, 2004.


 


 


	
   

  	
  STONESTREET LIMITED PARTNERSHIP, by its

  general partner, Stonestreet Corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Elizabeth Leonard

  
	
   

  	
  Chief Operating Officer

  



 


For the
purposes of this certificate:


 


(a)           “company” means any corporation,
incorporated association, incorporated syndicate or other incorporated
organization;


 


(b)           “control person” means any person, company
or combination of persons or companies holding a sufficient number of any
securities of the issuer to affect materially the control of the issuer but any
holding of any persons, company or combination of persons or companies holding
more than 20% of the outstanding voting securities of the issuer, in the
absence of evidence to the contrary, shall be deemed to affect materially the
control of the issuer;


 


(c)           “director” where used in relation to a
person, includes a person acting in a capacity similar to that of a director of
a company;


 


(d)           “entity” means a company, syndicate,
partnership, trust or unincorporated organization;


 


(e)           “financial assets” means cash, securities,
or any contract of insurance or deposit or evidence thereof that is not a
security for the purposes of the Securities Act (Ontario);


 


(f)            “individual” means a natural person, but
does not include a partnership, unincorporated association, unincorporated syndicate,
unincorporated organization, trust or a natural person in his or her capacity
as trustee, executor, administrator or other legal personal representative;


 


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(g)           “managed account” means an investment
portfolio account of a client established in writing with a portfolio adviser
who makes investment decisions for the account and has full discretion to trade
in securities of the account without requiring the client’s express consent to
a transaction;


 


(h)           “mutual fund” includes an issuer of
securities that entitle the holder to receive on demand, or within a specified
period after demand, an amount computed by reference to the value of a
proportionate interest in the whole or in a part of the net assets, including a
separate fund or trust account, of the issuer of the securities;


 


(i)            “non-redeemable investment fund” means an
issuer


 


(i)            whose primary purpose is to invest money
provided by its securityholders;


 


(ii)           that does not invest for the purpose of
exercising effective control, seeking to exercise effective control, or being
actively involved in the management of the issuers in which it invests, other
than other mutual funds or non-redeemable investment funds; and


 


(iii)          that is not a mutual fund;


 


(j)            “officer” means the chair, any vice-chair
of the board of directors, the president, any vice-president, the secretary,
the assistant secretary, the treasurer, the assistant treasurer, and the
general manager of a company, and any other person designated an officer or a
company by by-law or similar authority, or any individual acting in a similar
capacity on behalf of the issuer;


 


(k)           “person” means an individual, partnership,
unincorporated association, unincorporated syndicate, unincorporated organization,
trust, trustee, executor, administrator, or other legal representative;


 


(l)            “portfolio adviser” means


 


(i)            a portfolio manager; or


 


(ii)           a broker or investment dealer exempted from
registration as an adviser under subsection 148(1) of the Regulation if that
broker or investment dealer is not exempt from the by-laws or regulations of
the Toronto Stock Exchange or the Investment Dealers’ Association of Canada
referred to in that subsection;


 


(m)          “portfolio manager” means an adviser
registered for the purpose of managing the investment portfolio of clients
through discretionary authority granted by the clients;


 


(n)           “promoter” means (a) a person or company
who, acting alone or in conjunction with one or more other persons, companies
or a combination thereof, directly or indirectly, takes the initiative in
founding, organizing or substantially reorganizing the business of the issuer,
or (b) a person or company who, in connection with the founding, organizing or
substantial reorganization of the business of the issuer, directly or
indirectly, receives in consideration of services or property, or both services
and property, 10% or more of any


 


1-3

















 


class
of securities of the issuer or 10% or more of the proceeds from the sale of any
class of securities of a particular issue, but a person or company who receives
such securities or proceeds either solely as underwriting commissions or solely
in consideration of property shall not be deemed a promoter within the meaning
of this definition if such person or company does not otherwise take part in
founding, organizing or substantially reorganizing the business;


 


(o)           “related liabilities” means liabilities
incurred or assumed for the purpose of financing the acquisition or ownership
of financial assets and liabilities that are secured by financial assets; and


 


(p)           “spouse” in relation to an individual,
means another individual to whom that individual is married, or another
individual of the opposite sex or the same sex with whom that individual is
living in a conjugal relationship outside marriage.


 


Affiliated Entities, Control and Subsidiaries


 


1.             A person or company
is considered to be an affiliated entity of another person or company if one is
a subsidiary entity of the other, or if both are subsidiary entities of the
same person or company, or if each of them is controlled by the same person or
company.


 


2.             A person or company is considered to be controlled by
a person or company if


 


(a)           in the case of a person or company,


 


(i)            voting securities of the first-mentioned
person or company carrying more than 50% of the votes for the election of
directors are held, otherwise than by way of security only, by or for the
benefit of, the other person or company, and


 


(ii)           the votes carried by the securities are
entitled, if exercised, to elect a majority of the directors of the
first-mentioned person or company;


 


(b)           in the case of a partnership that does not have
directors, other than a limited partnership, the second-mentioned person or
company holds more than 50% of the interests in the partnership; or


 


(c)           in the case of a limited partnership, the general
partner is the second-mentioned person or company.


 


3.             A person or company is considered to be a subsidiary
entity of another person or company if


 


(a)           it is controlled by,


 


(i)            that other, or


 


1-4

















 


(ii)           that other and one or more persons or
companies each of which is controlled by that other, or


 


(iii)          two or more persons or companies, each of
which is controlled by that other, or


 


(b)           it is a subsidiary entity of a person or company that
is the other’s subsidiary entity.


 


1-5

















 


Appendix 1


 


For the
purposes of subscribing for the Series F Convertible Notes, all investors
resident in or otherwise subject to the laws of the Province of Ontario relying
on the “other” category of “accredited investor” on the certificate to which
this appendix is attached must qualify as one of the following (please
circle the applicable provision below and insert same in the space provided on
the certificate to which this appendix is attached):


 


(a)           a bank listed in
Schedule I or II of the Bank Act (Canada), or an authorized
foreign bank listed in Schedule III of that Act;


 


(b)           the Business
Development Bank incorporated under the Business Development Bank Act (Canada);


 


(c)           a loan corporation or
trust corporation registered under the Loan and Trust Corporations Act or under
the Trust
and Loan Companies Act (Canada), or under comparable legislation in
any other jurisdiction;


 


(d)           a co-operative credit
society, credit union central, federation of caisses populaires, credit union
or league, or regional caisse populaire, or an association under the Cooperative
Credit Associations Act (Canada), in each case, located in Canada;


 


(e)           a company licensed to
do business as an insurance company in any jurisdiction;


 


(f)            a subsidiary entity of
any person or company referred to in paragraph (a), (b), (c), (d) or (e), where
the person or company owns all of the voting shares of the subsidiary entity;


 


(h)           the government of
Canada or of any jurisdiction, or any crown corporation, instrumentality or
agency of a Canadian federal, provincial or territorial government;


 


(i)            any Canadian
municipality or any Canadian provincial or territorial capital city;


 


(j)            any national, federal,
state, provincial, territorial or municipal government of or in any foreign
jurisdiction, or any instrumentality or agency thereof;


 


(k)           a pension fund that is
regulated by either the Office of the Superintendent of Financial Institutions
(Canada) or a provincial pension commission or similar regulatory authority;


 


(l)            a
registered charity under the Income Tax Act (Canada);


 


(p)           a
promoter of the issuer or an affiliated entity of a promoter of the issuer;


 


(q)           a spouse, parent,
brother, sister, grandparent or child of an officer, director or promoter of
the issuer;


 


(r)            a person or company
that, in relation to the issuer, is an affiliated entity or a person or company
referred to in clause (c) of the definition of distribution in subsection 1(1)
of the


 


1-6

















 


Securities
Act (Ontario);


 


(s)           an issuer that is
acquiring securities of its own issue;


 


(u)           a person or company
that is recognized by the Commission as an accredited investor;


 


(v)           a mutual fund or
non-redeemable investment fund that, in Ontario, distributes its securities
only to persons or companies that are accredited investors;


 


(w)          a mutual fund or
non-redeemable investment fund that, in Ontario, distributes its securities
under a prospectus for which a receipt has been granted by the Director or, if
it has ceased distribution of its securities, has previously distributed its
securities in this manner;


 


(x)            a fully managed
account if it is acquiring a security that is not a security of a mutual fund
or non-redeemable investment fund;


 


(y)           an account that is
fully managed by a trust corporation registered under the Loan and Trust Corporations Act
or under the Trust and Loan Companies Act (Canada), or under comparable
legislation in any other jurisdiction; and


 


(z)            an entity organized
outside of Canada that is analogous to any of the entities referred to in
paragraphs (a) through (f) and item (iii) of the Certificate to which this
appendix is attached and paragraph (k) in form and function.


 


1-7

















 


SCHEDULE 2


 


THE TORONTO STOCK EXCHANGE


 


PRIVATE PLACEMENT QUESTIONNAIRE AND UNDERTAKING


 


To be completed by each proposed private placement purchaser of listed
securities or securities which are convertible into listed securities.


 


QUESTIONNAIRE


 


1.             DESCRIPTION OF TRANSACTION


 


(a)           Name of Issuer of the
Securities -  ADB Systems International
Ltd.


 


(b)           Number and
Class of Securities to be Purchased -


 


Series F 7% convertible secured note in the principal
amount of Cdn$500,000.00 (the “Note”), convertible at the holder’s option
at any time until the maturity date of May 19, 2007 for units at $0.31 per
unit.  Each unit consists of one common
share of the issuer and one half of one common share purchase warrant.  Each whole warrant entitles the holder
thereof to purchase one additional common share of the issuer at $0.50 per
share at any time prior to 5:00 p.m. on May 19, 2007. 


 


(c)           Purchase Price –
Advance of the principal amounts for the Series F Note in the amount of
Cdn$500,000.


 


2.             DETAILS OF PURCHASER


 


(a)           Name of Purchaser –
Stonestreet Limited Partnership


 


(b)           Address – 320 Bay
Street, Suite 1300, Toronto, Ontario, M5H 4A6


 


(c)           Names and addresses of
persons having a greater than 10% beneficial interest in the purchaser-
Stonestreet Corporation, General Partner of Stonestreet Limited Partnership


320 Bay Street, Suite 1300, Toronto, Ontario, M5H 4A6


 


3.             RELATIONSHIP TO ISSUER


 


(a)           Is the purchaser (or
any person named in response to 2(c) above) an insider of the issuer for the
purposes of the Securities Act (Ontario) (before giving effect to this
private placement)?  If so, state the
capacity in which the purchaser (or person named in response to 2(c)) qualifies
as an insider  -


 


No.


 


2-1

















 


(b)           If the answer to (a) is
“no”, are the purchaser and the issuer controlled by the same person or
company?  If so, give details  -


 


No.


 


4.             DEALINGS OF PURCHASER IN SECURITIES OF
THE ISSUER


 


Give details of all trading by the purchaser, as
principal, in the securities of the issuer (other than debt securities which
are not convertible into equity securities), directly or indirectly, within the
sixty (60) days preceding the date hereof 
-


 


See schedule attached.


 


2-2

















 


UNDERTAKING


 


TO:         TORONTO STOCK EXCHANGE


 


THE
UNDERSIGNED has subscribed for and agreed to purchase, as
principal, the securities described in Item 1 of the Private Placement
Questionnaire and Undertaking.


 


THE
UNDERSIGNED undertakes not to sell or otherwise dispose of
any of the said securities so purchased or any securities derived therefrom for
a period of four (4) months from the date of closing of the transaction herein
or for such period as is prescribed by applicable securities legislation,
whichever is longer, without the prior consent of the Toronto Stock Exchange
and any other regulatory body having jurisdiction.


 


DATED
at Toronto
this                        day
of May, 2004.


 


	
   

  	
  STONESTREET
  LIMITED PARTNERSHIP, by its

  general partner, Stonestreet Corporation

  
	
   

  	
  Name of Purchaser (please print)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Authorized Signature

  
	
   

  	
   

  
	
   

  	
  Chief Operating Officer

  
	
   

  	
  Official Capacity (please print)

  
	
   

  	
   

  
	
   

  	
  Elizabeth Leonard

  
	
   

  	
  Please print here name of individual whose signature
  appears above, if different from name of purchaser printed above

  
	
   

  	
   

  



 

















 


SCHEDULE 3


 


LIST OF SECURED PARTIES


 


	
  Secured Party

  	
   

  	
  File No.
  Under PPSA (Ontario)

  	
   

  	
  Registration
  No.

  
	
  Christopher Bulger

  	
   

  	
  888880464

  	
   

  	
  20021104144390654204

  20021108165217583161

  20030826182015316881

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jeff Lymburner

  	
   

  	
  084987306

  	
   

  	
  20021104151100439461

  20021108165217583169

  20030826182015316880

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kenneth Sparfel and

  Kelly Sparfel

  	
   

  	
  888880518

  	
   

  	
  20021104144390654209

  20021108165217583166

  20031021145615300346

  



 

















 


EXHIBIT A


 


FORM OF NOTE


 

















 


EXHIBIT B


 


FORM OF WARRANT